LME aluminium to be weighed on by a strong US dollar

Aluminium on London Metal Exchange will drop to USD 1,660-1,680/mt weighed on by strong US dollar and crude oil volatility. SHFE 1611 aluminium will struggle around the 5-day moving average and move at RMB 12,650-12,850/mt, predicted SMM.

Discounts in the range of RMB 160-120/mt are expected in east China spot market over SHFE 1610 aluminium contract.



Key macroeconomic indicators

1. Four big central banks- the European Central Bank, the Bank of Canada, the Bank of Indonesia and the Central Bank of Brazil are going to announce their interest rates for October this week.
2. China’s September credit loans and third-quarter data are awaiting release this week.
3. Commodity prices rose on the back of sufficient liquidity. Depreciation of Yuan helped commodity prices in China remain firm. Supporting commodities uptick were sufficient supply-side reform.

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4. Trend of value-addition in Chinese markets and PPI continue, and retail sales logged over 10 per cent nominal growth supporting China’s Q3 growth.
5. Fixed-asset investment still relies on government support, with transportation and electric heat production taking lion’s share.
6. US 30-year interest rate soared over the past two weeks, so there remains the likelihood of a Fed rate hike in November.